Purpose Code and More Details

Purpose Code is a code which will allow the banks you withdraw money to, to identify the nature of transaction. There are several different Purpose codes which can be used based on the type of transaction for which you received money in your PayPal account.

For example, if you exported any goods you will have to use the purpose code P0101 or P0104, if you provided services in Information Technology, you will have to use the purpose code P0801 or P0802 or P0803.

So now users will no longer have to use the earlier suggested Import Export Code for which they would have had to apply for a IEC number with the Government of India. You can download a PDF file containing all the purpose codes in the download section below.

New PayPal Withdrawal Process

For any new withdrawals after March 1st 2010, users will have to provide a Purpose Code while withdrawing money to their bank, this purpose code may be different for different transactions.

However, based on the amount of withdrawal, users will also need to furnish additional documents such as invoices or goods receipts. The max ceiling above which these documents will be required has not been made clear by PayPal yet, but in my experience, this amount should be Rs 50,000, based on my dealing with Indian banks who require users to add the PAN number whenever they are making deposits of 50K or more.

Receiving Payments in PayPal

Sadly, PayPal has not yet enabled the Personal Payments option for Indian users, however, users can receive payments in the following ways.

Using the Pay for Purchases (Goods or Services) tab

Completing PayPal checkout at your website

Responding to PayPal Request Moneyinstructions (invoices)

Download Purpose Code Table

I have created a PDF file which contains all the Purpose codes, their categories, description and when you should use it. You can download the PDF file for easy printing from here. Please do not link directly to the PDF file, if you want to, link back to this post.

Earlier today, we told you about how PayPal had restarted bank withdrawals for Indian users, however, that announcement came with a catch. Indian users had to fill a field called "Export Code" to initiate the withdrawal.

Now, PayPal has not really clarified much about the "Export Code", but it is basically a Importer Exporter Code (IEC) which is issued by the Government of India, for people who Import or Export goods or services outside India.

Now, PayPal by themselves will not provide users with an "Export Code" and users who require to withdraw payments to their banks will have to apply for it themselves and the process in itself might take several weeks.

So now designers, freelances and website payments will come under the prerogative of Import/Export laws, and taxes for the same will be applicable. This is definitely going to complicate the process of receiving and sending payments for PayPal India users and is 90% PayPal’s fault as they did not follow the rules laid down by Reserve Bank of India (RBI) in the first place.

Users who want to get the IEC will have to fill out a form and submit it to the respective department along with required documents to get it approved.

So get ready to face a lot of delays in getting both the IEC and your money out in the future. Getting the IEC is not a straightforward task and you will have to go through several processes and forms before you can get one.

It seems that the folks at PayPal have been diligentlyworking for freelancers and other online merchants in India. In an email (and a related blog post) PayPal says that they will be ready to resume local bank withdrawals by March 3rd, a few days shy of Holi:-

Today, we are happy to announce that the RBI has allowed us
to continue local bank withdrawals for settlements for exports
of goods and services. We are currently making changes to
comply with Indian regulations for settlements for exports of
goods and services, and we anticipate that, as of Wednesday,
March 3rd, customers will be able to use our
bank withdrawal service.

It seems that once the changes are in effect, any local bank withdrawal needs to have an Export Codefield filled out before the transaction is completed. This will enable the bank to identify the cross-border transaction’s nature. The necessary details will be provided in an email again on March 1st.

However, the situation on personal payments is still bleak as talks are on between PayPal and the Reserve Bank of India.

[T]he RBI has told us that PayPal needs specific
approvals to allow personal remittances to India, which we
currently do not have. Until we get these approvals, personal
payments into India will remain suspended.

However, it looks like there is some clarification on the issue from the official PayPal Blog, according to the new blog post, the problem occurred because of enquiries from India regulators with questions on whether personal payments constitute remittances into India.

Personal payments to and from India are suspended for a few months until they will be able to resolved the questions with Indian regulators. However, a good news is that local bank withdrawal will be available in the next few days, so you will get a chance to empty your PayPal account for good.

If a PayPal reversal has left you with a negative balance you will have to ask the sender to use the Purchase option for sending money to you. This is again a pain and I am sure that many of you will not be able to recover the money that was reversed.

PayPal has come clean, however, I believe that it did a bit too late after it’s reputation took a huge hit. If PayPal would have been a regular bank they would have totally been taken out by the RBI, however, what can we say, we rely on it.

You Lousy and freaking son of a eBay and Amazon Gun, I don’t care who you are and what you do. Why? Because you charge more than a bank, always charge me some amount of my hard earned and sweat induced money and I still keep quite. I have never raised a voice whenever you have milked me of 2-4% of my hard earned money every bloody time.

Well to start out with, I was definitely upset and pissed off when you pulled out six payments from my account, but more than that, I was pissed off that you pulled off several payments I sent out to people who create an ecosystem around this website and that pissed me off to no end.

Why did I rely on you in the first place to send out payment, because, you are the only so called payment system which allows worldwide payments, and I came to rely on you. I was not really upset that you pulled off so called operations in India, I was more pissed off because you did so without intimating anyone and for the matter of fact you did not even intimate anyone before reversing payments.

If you have any clues about what you did, you might want to read the comments here. I certainly could not pacify them that they lost their hard earned money, all I could assure them was that everything would be alright. But a paunchy ass that you are, you had to go and ruin it by threatening someone that their credit card would be charged for no fault of theirs. At this point I lost both ignorance and patience about you. Why, because for such a long time I had only believed in you and did not withdraw money, but now seriously, if you ask me, I do not even want to keep any money with you.

You would be curious at my outrage, other than the enormous money you have earned from me by milking me every time, along with the Interest you earned on investments, because I trusted you more than a bank.

Well, here is why. First of all I sent a payment to someone who withdrew it to his bank. After a blue moon and when you realized your own problems, you decided to withdraw the money I sent to him. Now that would be fine, but you did not intimate him or me about it. Now after all is said and done, his account went into a negative balance. OH AND WELL IT IS OUR FAULT, WE SINCERELY APOLOGIZE FOR THAT, but still you threaten him that you will charge his mother’s credit card account to recover the dues??? Are you bloody fucking serious? Why the hell did you reverse the payment in the first place? It is our fault that you did not intimate us? Is it our mother’s fault that she decided to activate a credit card with PayPal.

Why the hell should we pay for your fault you mother sucking MoneySucker? Every time you charge us for payments we keep our mouth shut. Every time we send payments and other’s receive it, they have to keep their mouth shut. It is high time we fucking shut PayPal once and forever.

We need a PayPal alternative that is not sleazy and does the job. If you are one, let me know. I will use you and if I like you I will promote you. But, good luck PayPal, you just earned my middle finger.

As a honest and sincere user of PayPal, I ask every other user to withdraw their money and BOYCOTT PAYPAL, BOYCOTT PAYPAL forever. Never accept a payment in PayPal, if you think that this is the last time those assholes did this, you are wrong, if someone really cared about you and YOUR MONEY, they would first tell you about it, it does not matter if you lost $1 or $10000. PayPal fucked up by not intimating its customers before doing what it did. And believe me, when you play with someone’s money without telling them, you not only fucked up, you also lost every bloody fucking credibility you carried around.

Cheers Keith

Disclaimer: The views in this post are my own and do not reflect that of Techie Buzz.

In a jolt for Indian users of PayPal, they have decided to stop personal payments that are sent to Indian accounts and originate from one. The issue has quickly escalated and snowballed because several web publishers rely on PayPal to receive online payments from advertisers and clients.

The shock was even bigger when PayPal started reversing payments received by Indian accounts and sending them back to the people who sent them. Here is a email that Indian publishers have been receiving after PayPal reverses the payments.

Hello Publisher,

Your payment of XXX has been sent back to the sender of the payment.

We reversed this payment because we have stopped allowing personal payments to be sent to or from India. If this was a payment for a purchase of goods or services, and not a personal payment, then you may contact the buyer and have him or her resend the payment as follows: (a) click the Send Money tab, (b) select "Goods," and (c) provide a shipping address.

If this payment was a personal payment such as a gift, then we have requested that the sender find another payment method until we restore personal payments to and from India.

We are trying to resolve this issue as quickly as possible and we’re sorry for any inconvenience.

Thank you, PayPal

TechCrunch was able to get an update on this issue from Anuj Nayar, Director of Global Communications at PayPal, he said:

I can confirm that personal payments to and from India have been suspended while we address some questions from our business partners. You can still make commercial payments. We’re trying to resolve the situation as quickly as possible and we’re sorry for any inconvenience this may cause.

However, no matter what the problems were, PayPal definitely did not handle it amicably. There was absolutely no intimation to users about this issue and people who withdrew the money from their accounts now face negative balances. We will try and get more information about this issue and update you, however, it is high time we see more PayPal alternatives rather than be a victim of such unwarranted actions.